The euro has slipped as Europe’s share markets have advanced strongly this morning, as investors positioned for the European Central Bank and the U.S. Federal Reserve have extended their monetary measures to stimulate economic growth across the region. Opinions remain divided as to whether the ECB will lower interest rates, however, data is expected to show euro zone inflation falling further below the ECB’s target. This would add to the case for a cut, which has been building all month as economic data points to a slowdown in business activity across the continent.
“Expectations of further monetary stimulus from global central banks combined with indications that the pace of fiscal austerity may be eased in the euro-zone are encouraging the pick up in risk seeking behavior,” Lee Hardman, currency analyst at the Bank of Tokyo-Mitsubishi UFJ said in an note.
The pan-European FTSEurofirst 300 index, on course for its 11th straight monthly gain, is currently up 0.5 percent at 1,208.50 points in early trading, taking its April rise to 1.6 percent. London’s FTSE 100, Paris’s CAC-40 and Frankfurt’s DAX have risen 0.3, 0.25 and 0.9 percent respectively.
The gains in Europe follow on from yesterday’s record close for the S&P 500 index on Wall Street and Tuesday’s 1.1 percent jump in MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS to a seven month high.
The euro has edged down 0.2 percent to $1.3070, supported by the formation of a new government in Italy but pressured by the expectations of a rate cut at the ECB’s monthly policy meeting. The new government in Italy has filled a two-month political vacuum in the euro zone’s third-largest economy. Relief has helped to bring the country’s five- and 10-year borrowing costs down to their lowest level since October 2010 as of yesterday.
Elsewhere gold has fallen 1 percent as outflows from exchange-traded funds and surging stocks undermine confidence in the precious metal and tempt investors into equities. Spot gold is now trading at around $14 an ounce lower at $1,464.
London copper steadied around $7,145 a ton but faces its biggest monthly loss in six months in April. A worsening outlook for global growth has driven investors to cut their commodities exposure, but expectations of more central bank easing has curbed the losses.
Also lifting markets, Apple Inc has jumped 3.1 percent to $430.12 after taking initial steps for what would be its first debt sale. The Dow Jones industrial average is up 106.20 points, or 0.72 percent, at 14,818.75, and The Standard & Poor’s 500 Index is up 11.37 points, or 0.72 percent, at 1,593.61. The Nasdaq Composite Index is up 27.76 points, or 0.85 percent, at 3,307.02, and among energy shares, Chevron Corp has risen 1.1 percent to $121.32.
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